question archive Shanigan Goods purchases $20,000 of inventory during the period and sells $18,000 of it for $30,000

Shanigan Goods purchases $20,000 of inventory during the period and sells $18,000 of it for $30,000

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Shanigan Goods purchases $20,000 of inventory during the period and sells $18,000 of it for $30,000. Beginning of the period inventory was $3,000. What is the company's inventory balance to be reported on its balance sheet at year end?

A. $ 5,000

B. $ 3,000

C. $ 2,000

D. $18,000

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Answer: A. $ 5,000

Calculations :

  • The opening inventory balance is $3,000
  • The purchases made during the month is $20,000
  • The cost of sales is $18,000

Closing inventory balance = opening inventory balance + purchases made during the month - cost of sales
=$3,000 + $20,000 - $18,000
=$5,000

The company's inventory balance to be reported on its balance sheet at year-end 1s $5,000

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